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Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 112 - Modifications to cost base and reduced cost base  

Subdivision 112-A - General modifications  

SECTION 112-30  Apportionment rules  

 ITAA 36

Apportionment on acquisition of an asset

112-30(1)  

If you *acquire a *CGT asset because of a transaction and only part of the expenditure you incurred under the transaction relates to the acquisition of the asset, the first element of your *cost base and *reduced cost base of the asset is that part of the expenditure that is reasonably attributable to the acquisition of the asset.

The expenditure can include giving property: see section 103-5 .

Apportionment of expenditure in other elements

112-30(1A)  

If you incur expenditure and only part of it relates to another element of the *cost base or *reduced cost base of a *CGT asset, that element includes that part of the expenditure that is reasonably attributable to that element.

Apportionment for CGT asset that was part of another asset

112-30(2)  

The *cost base and *reduced cost base of a *CGT asset is apportioned if a *CGT event happens to some part of the asset, but not to the remainder of it.

Note:

The full list of CGT events is in section 104-5 .

112-30(3)  

The *cost base for the *CGT asset representing the part to which the *CGT event happened is worked out using the formula:
Cost base of the asset×  Capital proceeds for the CGT event
        happening to the part        
  Those capital proceeds plus the market
  value of the remainder of the asset

The *reduced cost base is worked out similarly.

112-30(4)  

The remainder of the *cost base and *reduced cost base of the asset is attributed to the part that remains.

Example:

You acquire a truck for $24,000 and sell its motor for $9,000. Suppose the market value of the remainder of the truck is $16,000.

Under subsection (3), the cost base of the motor is:
$24,000×      $9,000      
$9,000 + $16,000
=$8,640

Under subsection (4), the cost base of the remainder of the truck is:
$24,000   -   $8,640   =   $15,360

112-30(5)  

However, an amount forming part of the *cost base or *reduced cost base of the asset is not apportioned if, on the facts, that amount is wholly attributable to the part to which the *CGT event happened or to the remaining part.


 



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